Sir Martin Sorrell on why Cannes Lions matters, the uncertainty of AI, and dinner with Berlusconi

Sir Martin Sorrell on why Cannes matters, the uncertainty of AI, and dinner with Berlusconi
The Media Leader Interview: Cannes Lions 2023

In the first of a series of global media leader interviews this week, Sir Martin Sorrell is certain Cannes Lions still matters, but will be attended by fewer clients and even more tech companies during this challenging year for advertising.

“Breaking news: Silvio Berlusconi has just died, aged 86!” Sir Martin Sorrell exclaims as an interview with The Media Leader is about to wrap up.

This is fairly typical fare when talking to the pugnacious S4 Capital founder and erstwhile WPP leader — the man’s connections stretch so far and wide that breaking news alerts are often prompts for personal anecdotes.

“How did you get on with a character like that?”, The Media Leader asks in response, before being unable to resist the follow-up: “Did you, er, go to any parties with him?”

“No, no parties…” Sorrell insists with a chuckle. “But I had dinner with him at his home and I met him on several occasions. He was great, and his kids, too… a real character!”

It takes one to know one, as they say. Sorrell may not be a “major holding company” leader but remains a major force and outspoken character in an industry facing a tide of disruption and uncertainty.

We’re meeting to speak about Cannes Lions, described by Laurence Green in this publication’s latest podcast episode as a “microcosm” of the state of media and advertising these days: the festival is billed as a celebration of “creativity” but most of the conversations happening around town involve media and tech people talking about media and tech.

‘Cannes is becoming more like CES’

Or maybe it’s even worse than that. Cannes Lions is a fairly standard exhibition centre — which, in order to ram home its exclusivity — describes itself as a “Palais”. Inside this Palace the awards are celebrated over the course of a week in between a stream of “thought leadership” sessions. Outside of the jamboree, a gaggle of branded yachts, cabanas, hotels and outdoor posters promote the media and tech companies whose financial muscle now powers the industry.

As for thought leadership, Sorrell will speak today about “how marketers and creatives can help brands unlock truly transformative growth”. Much of his talk is likely to discuss generative artificial intelligence, and Sorrell certainly has much to say about that.

Clearly Cannes matters to Sorrell enough to warrant his attendance. But why? Is it still a “creative” festival? Sorrell offers a flat “no”.

“If you compare it to [the Consumer Electronics Show], CES has become more like Cannes and Cannes come more like CES,” Sorrell says. “The Roger Hatchuel original vision, which was much more Francophile than global and was much more focused around the traditional creative community. This isn’t that [anymore]. When you look at the beach, the beach is going to be dominated by tech. And even the advertising holding companies are trying to say that ‘we’re really technological transformation companies.’”

As for his own business, S4 Capital, which he launched in 2018 within months of being ousted as WPP chief executive, Cannes is “hugely important” for morale and for the company’s clients.

“I’m not sure about deal-making, but [Cannes] is hugely important for our people, because we love to win awards. Clients love to win awards, too…. [B]ut it’s very difficult to plan because you never know what the mood is going to be. It becomes even more significant in a work-from-home world or a work-from-anywhere world — it is one of those gatherings where people can get together and spark ideas face-to-face.”

Growing pains: why all the chat is about AI

Sorrell predicts there will be “fewer clients” and “more tech companies” at Cannes this year.

The 78-year-old is quite looking forward to the 2023 edition because of what he sees as “a lot of crosscurrents” impacting this business globally.

“There’s a certain hesitancy amongst clients, you know, towards the end of last year for fixing their operating budgets for this year. And, as a result, their marketing budgets [are down] and you can see it in the Q1 results. There’s been a damping down of the growth rate. That will probably improve as we go back, go through the year and in Q3, Q4.”

In particular, he expects Amazon and Apple — two companies that give off the distinct impression they are more interested in building grand consumer “ecosystems” than prosaic ad-buying platforms — will be more prominent at Cannes Lions this year. Amazon is an “official fringe content partner” and features no less than seven times on the official events programme, whereas Apple’s marketing communications chief is hosting a single session on “unboxing” on Thursday.

Predictably, the tech conversation is going to be dominated by AI and generative AI and, according to Sorrell, people need to be aware of “the geographical bucket and the growth bucket”.

He explains: “On the geography side, the Chinese platforms, obviously, are threatened by potential regulatory issues, not just globally but in China as well. So they will want to be prominent in making their arguments that they shouldn’t be affected by regulation.”

Meanwhile, AI is being banked on as a major route to growth for a tech sector that took a major haircut last year and at the beginning of this year as online ad growth slowed down and consumer demand was dampened by high inflation. Stock markets have rallied in recent weeks, not only because inflation is coming down and the US has avoided a debt catastrophe, but because of improved business confidence.

“The tech companies, the big ones, are going to have to grow organically; they’re not going to go through acquisition, which makes development such as AI and generative AI even more important for them.”

Sorrell is, of course, tight-lipped about future merger plans (every M&A deal S4C does is described as a “merger”, not an “acquisition”) but admits it’s a much tougher market to grow by agglomeration. The company’s first mergers, MediaMonks and MightyHive, were integrated in 2021 to form a unitary Media.Monks business.

The Brandtech Group’s acquisition of Jellyfish was a recent exception to the rule, and Sorrell can’t resist a dig at when the rival company is mentioned. “That [deal] took a long time…” he says, suggesting that the parties couldn’t agree a straightforward cash buyout. The Media Leader did ask about this in an interview with Brandtech Media’s Nick Emery earlier this month.

S4C has also faced challenges in recent months after a fast start and a flurry of growth powered by a volley of acquisition. A year ago the company halted annual bonuses for Sorrell and other executive directors after the company’s annual results were twice delayed, described by Sorrell as “unacceptable and embarrassing”. Sorrell himself had to undergo surgery to remove a tumour and S4 admitted in this year’s annual report that its share price and reputation could slide if he were to leave “without an effective succession plan” in place.

Why S4C’s global footprint will max out at 40 countries

Nevertheless, S4C, a digitally-focussed business, was able to report revenue of more than £1bn for the first time, and its client roster includes a number of what Sorrell has taken to call “whoppers”, namely Google, Diageo and TikTok. The company’s mantra has now been modified to “faster, better cheaper, and more…” to reflect the company’s improved ability to make copywriting and production faster, to automate media planning and buying, and to provide hyper-personalisation at scale.

The agility of being an online-centric business means that, rather than trying to match its larger rivals for geographical footprint, you can benefit more from a “deglobalised” media ecosystem, Sorrell says.

“You don’t have to be in 100-plus countries anymore. We’re in 32, we pulled out of Russia, and probably we should add another four or five. But I can’t see us going beyond 40. Given the technology, you can service things out of hubs. That’s increasingly what you will see.”

More generally, he is curiously on the fence about the impact of AI on media and advertising. He is clear that it’s “inevitable” but untypically equivocates on the subject rather than pontificates.

“It’s wonderful, it’s eye opening, eye popping, even. But at the same time, it’s frightening people… A young creative came up to me [at an event] and asked me, ‘Am I going to lose my job? The first impact that we’ve seen is on copywriting and visualisation, improving the productivity in that area.

“The second area is hyper-personalisation… so for Netflix, instead of producing one-and-a-half million different creative executions for one campaign, we can, at least theoretically, produce 5 million.

“The third area is in impact timing [and] media planning. Will the holding companies have to have 400,000 people, many of them implementing media planning and buying campaigns? When will be an algorithm be better than the 25-year-old media planner?”

It’s refreshing to see Sorrell, a man famed for clear-eyed decision-making and attention to detail, leave room for doubt about the future. While the contradictions of Cannes may tell you a lot about the state of advertising and media, the evolution of Sorrell does, too. The future is less certain and so, it seems, is he. Perhaps the questions we ask at this year’s Cannes Lions are more important than the answers we are given.

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